Best mortgage deals for first-time buyers

Buying your first property can be a daunting task. The sheer variety of mortgage products means it can be hard to compare your options to find the best offers.

Each week, Moneywise reviews the market to show you the best variable and fixed rate deals currently available for high loan to value (LTV) borrowers.

Remember that once any fixed rate period ends the mortgage will revert to a standard variable rate (SVR), so make a note in your diary and switch to a cheaper deal when that happens.

Our example first-time buyer has a 10% deposit and is looking to buy a £200,000 property over 25 years. For ease of comparison, we’re assuming any bank or building society fees are paid up front. Otherwise interest will be charged on the fees, which will add hundreds of pounds to the overall cost of your loan.

Fixed rate deals

Yorkshire Building Society, up to 90% LTV, 1.97%
Fixed until 31 August 2019 then reverts to SVR (currently 4.74%)

This mortgage will cost £760 per month, £9,599 per year over two years. Fees are £950 after cashback.

HSBC, up to 90% LTV, 2.34%
Fixed until 30 September 2019, then reverts to SVR (currently 3.69%)

This deal from HSBC comes with no fees. Repayments are £793 a month, which is £9,603 a year over the first two years. 

Longer fixed rate deals

Leeds Building Society, up to 90% LTV, 2.8%
Fixed until 31 August 2022, then reverts to SVR (currently 5.44%)

For those looking to fix for a longer period then Leeds Building Society offers a 2.8% rate, fixed for five years. This mortgage costs £835 a month - £10,087 per year over the fixed period - and comes with no fees.

Nationwide, up to 90% LTV, 3.89%
Fixed for 10 years then reverts to SVR (currently 3.74%)

Many 10-year fixes are also available if you're willing to fix for longer. If you’re comfortable paying an upfront £999 product fee, Nationwide offers a long fix with a rate of 3.89%. This will involve monthly repayments of £939 and an outlay of £11,408 per year.

Variable rate mortgages

West Bromwich Building Society, up to 90% LTV, 2.19%
1.8% discount until 31 August 2019, then reverts to SVR (currently 3.99%)

For buyers who are willing to risk a rate rise (or gamble on a further rate cut), West Bromwich Building Society offers a 1.8% discount on its SVR. There is a £500 cashback incentive and no upfront fees. The annual cost is £9,224.

Larger deposits

Halifax, up to 75% LTV, 1.96%
Fixed until 30 September 2019 then reverts to SVR (currently 3.74%)

There are £355 in upfront fees to pay, but £1,000 cashback more than covers this outlay. Monthly repayments are £633 so the effective annual cost is £7,272. 

Post Office Money, up to 75% LTV, 1.43%
Fixed until 31 August 2019 then reverts to SVR (currently 4.24%)

The Post Office offers a two-year fixed rate up to 75% LTV at 1.43%. There is a £495 fee to pay but £400 cashback on offer. The monthly repayments on a £150,000 advance are £595, equivalent to £7,322 a year. 

Interest-only deals

If you’re looking for interest-only options, remember the rules are now a lot stricter and you’ll need to show a well-thought out plan for repaying the capital at the end of the mortgage. Monthly repayments are much lower than with capital repayment, but you'll pay more interest on an interest-only mortgage in the long run. 

Not every provider will lend on an interest-only basis, so if you’re looking for one it’s best to speak to a mortgage broker. Our mortgage tool can help you get a feel for the rates on offer.

Free expert mortgage advice service

  • L&C will compare, advise on and arrange the best mortgage for you from 1000's of deals
  • You'll always get advice from a qualified mortgage expert
  • Open 7 days a week including until 8pm on weekdays

Call free on 0800 073 1936 or see mortgage best buys online.

Published: 29 July 2015
Last updated: 27 June 2017

Leave a comment